As was noted earlier in 2015, the IRS has now provided a transcript alternative to the issuance of closing letters for Forms 706. The details of obtaining the transcript is found on the IRS website at https://www.irs.gov/irspup/Businesses/Small-Businesses-%26-Self-Employed/Transcripts-in-Lieu-of-Estate-Tax-Closing-Letters.
The IRS had earlier announced that the agency would no longer be issuing closing letters to estates that had filed Form 706 for forms filed on or after June 1, 2015. While the initial announcement had indicated there would be a method to request a closing letter, the IRS later suggested at an ABA conference that it would create a transcript system to replace estate closing letters.
That system was announced the first week of December of 2015. Two options are provided. Either a tax professional with a power of attorney on record can request a transcript to be created and delivered online via e-services or an authorized representative of the estate may request the transcript via Form 4506-T.
The instructions for the online delivery are reproduced below:
Transcript Delivery Service (TDS)
For all estate tax returns filed on or after June 1, 2015, estate tax closing letters will be issued only upon request by the taxpayer. In lieu of an estate tax closing letter, account transcripts are available online to tax professionals. An account transcript from the Transcript Delivery System (TDS) reflects transactions including the acceptance of Form 706 and/or the completion of an examination.
Tax professionals can register on IRS.gov to secure estate tax transcripts. Registered tax professionals are eligible to use TDS to request and receive account transcripts. Requests for these products will be fulfilled only when a properly executed Form 2848, Power of Attorney or Form 8821, Tax Information Authorization, is already on file. TDS user access defaults to approved principals, responsible officials, and principal consents on the e-file application. These individuals may authorize TDS access to 'delegated users' in their business.
NOTE: The decision to audit a Form 706 is typically made four to six months after the filing date. Please wait four to six months after filing Form 706 before submitting a request for an account transcript.
To request an estate tax account transcript, access IRS.gov and make these selections:
1. for Tax Pros
2. Access e-Services
3. Login or Register
At the Understanding the Transcript Delivery System page, select Request Transcript.
Note: Although several options are listed under the "What You Can Do" section, only the Request Transcript option is activated for estate tax information. Please do not attempt to request any other data.
The Product Delivery Options page will show on the screen after Request Transcript is selected. The pre-populated default settings work best for online viewing, printing or saving account transcripts. The default settings are:
- Contact Type: Paper
- Delivery Method: On-Line
- Alternate Delivery Method: Secure Mailbox
- Taxpayer Type: Individual
- User Name: Your name will auto populate
In addition to receiving an online transcript, TDS also allows the user to generate a cover letter. Check the box if a cover letter is desired. Select Continue.
At the top of the Taxpayer Information page, enter the decedent's Social Security Number (TIN), First Name and Last Name. On the bottom section of the Taxpayer Information page, make selections from the drop down menus as follows:
- Product Type: Account Transcript
- Request By: MFT Code
- Request Purpose: Select "Other", then add an explanation such as "Examination Status".
- Using the MFT 52 row displayed, complete these fields
- Beginning Tax Year: Enter the year of death
- Beginning Tax Month: Select the Month of death from the drop down menu.
When finished, select Add Request.
Next, scroll down on the results page and select Continue. (If no record is found, check the data input for accuracy.)
On the Get Products screen, click on Get Product to generate the transcript. To create a cover letter, select Create Letter.
Following a successful request, an Account Transcript will display on the screen.
- The Transactions section of the transcript contains details of the entire account. Each line shows a transaction code with an explanation of the code, the date of the transaction, and the dollar amount, if appropriate.
- Transaction Code 421 indicates an Estate Tax Return (Form 706) has been accepted as filed or that the examination is complete. Please note that the Transaction Code 421 explanation will display "Closed examination of tax return" in all instances. If Transaction Code 421 is not present, the tax return remains under review. Allow additional time before checking again.
- The transcript may be printed for your records.
Sign Out when finished.
For additional information or help with using the program, click on TDS Tutorial on the top line menu.
The instructions for requesting the transcript via Form 4506-T are provided below:
Transcript using Form 4506-T
The IRS can provide an account transcript for estate tax returns using Form 4506-T, Request for Transcript of Tax Return. You may request the transcript by fax or by mail using Form 4506-T and have it mailed to your address. NOTE: The decision to audit a Form 706 is typically made four to six months after the filing date. Please wait four to six months after filing Form 706 before submitting a request for an account transcript.
Form 4506-T and instructions are available in fillable format on IRS.gov. Form 4506-T has multiple uses and special attention must be taken when completing the form for an estate tax inquiry. Complete the form using the printed instructions paying close attention to the following:
Boxes 1-4: Enter the decedent’s information including an SSN. The taxpayer’s representative should match the original tax filing.
Box 5: Enter the third party designee, if appropriate, and attach sufficient documentation granting authority to receive tax information.
Box 6: The ONLY option available for estate tax is 6b. DO NOT make any other selections in items 6-8.
Box 9: Enter the decedent’s date of death as the tax period (MMDDYYYY).
Documentation: Include Letters Testamentary or the equivalent, Form 56, Form 2848, and/or any other official documentation authorizing the requestor to receive the data.
Signature Requirements: Line 5 of Form 2848 must be completed authorizing the representative to receive the information requested.
The instructions for Form 4506-T provides a chart directing where to mail or fax the request based upon the state in which the decedent was domiciled. Choose the RAIVS Team in either Ogden, UT or Cincinnati, OH.
After verifying and processing Form 4506-T, an account transcript will be mailed to the requestor. The Transactions section of the transcript contains details of the entire account. Each line shows a transaction code with an explanation of the code, the date of the transaction, and the dollar amount, if appropriate. Transaction Code 421 indicates an Estate Tax Return (Form 706) has been accepted as filed or that the examination is complete. Please note that the Transaction Code 421 explanation will display "Closed examination of tax return" in all instances. If Transaction Code 421 is not present, the tax return remains under review. Allow additional time before checking again.